Blue Mountains Mayor Mark Greenhill has been scathing of the Department's apparent involvement in the Lithgow fire, saying although there was not a total fire ban in place that day the Department should have realised conditions were not ideal.

"It's done damage to my community and it just shouldn't have happened. Not happy at all," he told the ABC's 7.30 program.

"There's the damage it does to the community and the stress it causes. There's the damage it does in terms of the risks taken by the firefighters.

"There's the damage it does in terms of the costs to the community of fighting that fire and let's not forget it's still going, it's still out there."

Defence has confirmed it was conducting live ordinance exercises at the Marrangaroo Training Area the day the fire started.